Tuesday, January 15, 2013

Why I am moving from FundsIndia to FundSupermart

I have been a FundsIndia customer for a very long time - almost from their infancy days. I love their neat and clean UI and the user experience. However, recently I have started contemplating a move from FundsIndia to FundSupermart.

I have concern about their new open-ECS-mandate for SIPs. This open-mandate looks way too open to me.
Attached is the open-ECS mandate of FundsIndia -

The problem I have is with the language used here. Let's consider this example. Say, I want to start an SIP of Rs. 30,000 per month. That means I should give a mandate which allows FundsIndia to deduct maximum Rs 30,000 per month. Now, if we notice the highlighted parts (Frequency & Amount ) in the attached mandate, it says that the mandate allows deduction of Rs 30,000 PER DAY!!!

It means for investing Rs 30,000 per month, I have to give a mandate for deduction of Rs 900,000 (Rs 30,000 per day * 30) per month! Why would I want to do that? To add to it, the minimum duration for the mandate is 5 years! Giving this mandate feels like giving post-dated cheques for Rs 30,000 for each day of next 5 years!

The mandate does not anywhere say 'once a  month' or 'maximum amount per month' etc.!

When I contacted FundsIndia customer care, they informed that the daily limit is set to allow customers choose any day of the month for SIP and I think that may be a valid statement - I do not counter that.
I understand that it gives flexibility of choosing any date as SIP date. On FundsSupermart, we have to select a specific date out of the ones they have listed (Any date out of 7th, 14th, 21st, 28th etc.) - this reduces the flexibility but then I would (any customer would) prefer clarity on the document we sign as opposed to such flexibility. mandate of FundSupermart clearly mentions the frequency as monthly and maximum deduction limit per month! (their ECS mandate attached below)

Before this post sends out any wrong signals, let me clarify - I trust FundsIndia that it will not make any unauthorized debit from my account but still when it comes to signing a 'cheque', I would strictly go by the wordings of the document!

I am open to any suggestions my understanding on the mandate is incorrect! FundsIndia customer care could not give me satisfactory answer if my understanding was wrong!
On the flip side, I feel when a document is too complex for a common man to understand, it is better to be apprehensive :)

I had a very long mail chain with the customer care of FundsIndia and in the end, we agreed to disagree on this point.
FundsIndia chose to stick to their mandate and I chose to avoid signing such a mandate.... avoid SIPs with FundsIndia.